BlackBerry Playbook: Buy Marvell, Not RIM

After weeks of slow leaks and rumors, Research In Motion (Nasdaq: RIMM  ) has finally announced a tablet computer. Should Apple (Nasdaq: AAPL  ) be quaking in its boots as the RIM PlayBook moves in to kill the iPad?

Kill the iPad?
In a word, no. The two devices appear to be aimed at very different target markets. The iPad is largely a toy -- a very capable toy with a large assortment of productivity tools available for download, but still designed mostly to titillate and entertain. The PlayBook comes with BlackBerry-style security and business tools built in; it is also smaller and more likely to find its way into double-breasted business suit pockets.

Besides, the PlayBook is scheduled to be available in "early 2011," which makes today's announcement nothing more than a paper launch. The iPad's head start grows larger day by day, and that first-mover advantage is very important in a trend-sensitive market like this new tablet computer craze.

The Samsung Galaxy Tab stands a greater chance of making an impact on the iPad's dominance by dint of launching earlier with a comparable feature list. But then, that tablet runs the Android operating system, placing it squarely in between the work-oriented BlackBerry demographic and the leisurely Apple gang. There's no telling whether that distinction will make the Galaxy Tab a threat to both of those camps or neither one.

What's inside the black box?
Still, it's safe to assume that CrackBerry addicts will storm in to snatch up their PlayBooks at launch, and there's still a good number of them running around. The device will sport a 7-inch screen with front-and-back video cameras and a very capable video subsystem. An unspecified dual-core processor running at 1GHz makes this a heavyweight in terms of raw power. But I think we can figure out who makes that processor.

Dual-core ARM chips slated to be available before the launch date include an updated Qualcomm (Nasdaq: QCOM  ) SnapDragon chipset, the NVIDIA (Nasdaq: NVDA  ) Tegra 2, a new Texas Instruments chip, and a respun Samsung Hummingbird. Longtime RIM favorite Marvell (Nasdaq: MRVL  ) hasn't exactly announced a dual-core processor (it recently announced a tri-core Armada chip), but certainly has the technology for it and may have given RIM samples before spilling the beans to the public.

These are all very capable choices, but Marvell and RIM have history together that makes some version of the Armada line the logical pick. If I wanted to buy a chipmaker based on the PlayBook selling like hot grits, Marvell would be my first choice with Qualcomm perhaps playing second string.

All work and no play ...
The iPad was clearly on RIM's mind as it designed this tablet: The press release takes a nice, oblique swipe at Apple: "The BlackBerry PlayBook solidly hits the mark with industry leading power, true multitasking, uncompromised web browsing and high performance multimedia," says co-CEO Mike Lazardis [emphasis mine].

If Apple ever decides to invite Adobe Systems (Nasdaq: ADBE  ) and its Flash multimedia framework to the iPhone and iPad parties, we'd see a lot less of these "uncompromised web browsing" remarks from the competition. But make no mistake, RIM knows who butters its bread. A name like "PlayBook" may sound whimsical, but football is serious business, too.

This device is "Perfect for either large organizations or an 'army of one'," and features include both "advanced security" and "out-of-the-box enterprise support." The darn thing shares the fundamentals of its operating system with the largest routers Cisco Systems (Nasdaq: CSCO  ) sells, thanks to RIM's purchase of QNX this spring. If all of that doesn't add up to a serious focus on business-class users, I don't know what does.

Where do I go now?
It'll take a lot of tablets to move the needle for RIM, but this product launch would be a very significant revenue driver and general business catalyst for Marvell if I'm right about the processor supply chain. The company has not had a lot of luck selling high-end processors in real volume, but this could be the product that finally kick-starts the Marvell Armada invasion.

Do you see any other way to invest in this device launch without exposing yourself to the dwindling importance of BlackBerry smartphones? Feel free to share your insights in the comments below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Apple, Adobe Systems, and NVIDIA are Motley Fool Stock Advisor selections. The Fool has written calls (Bull Call Spread) on Cisco Systems. The Fool owns shares of Apple, Marvell Technology Group, and QUALCOMM. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (7) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 28, 2010, at 2:16 PM, isellwireless wrote:

    Dear InfoThatHelp:

    As always, your erudite comments impress me with the way you tie your negative view of RIMM with the article above.

    Clearly the article recommends buying a device supplier's stock instead of the device itself simply because of demand opportunities. Whether Playbook is a drag, RIMM burning candle ends or dwindling clientele is a different topic altogether.

    Of course, I always enjoy reading your nonsensical approach to analyzing RIMM.

    Always,

    Your #1 Fan

  • Report this Comment On September 28, 2010, at 2:22 PM, jrmart wrote:

    I don't really understand why you call the IPAD a TOY when the University of California at Irvine Medical School just put their 4 year training program on the IPAD. The same is occurring in major corporations. They are using the IPAD as a great sales tool. The IPad connects directly to enterprise mail servers like Microsoft Exchange and Lotus Domino via Exchange ActiveSync providing users push email, calendar events, and contacts. IT can enforce complex passcodes and remotely wipe a lost or stolen IPad instantly. Certificate-based authentication means only approved users get access to Exchange, and encrypted SSL communication to and from the server keeps data safe. IPad also supports standards-based servers for email, calendars and contacts. IMAP servers enable users to sync email and notes. CalDAV support for calendar servers like iCal Server, Oracle Beehive, or Zimbra delivers new events and allows user to create invitations on the go. And LDAP support gives users access to their corporate directories. iPad easily connects with corporate VPN servers to give users secure access to critical business information. The built-in VPN client supports Cisco IPSec, L2TP/IPSec and PPTP tunneling protocols. And VPN On Demand on iPad leverages certificate-based authentication to make connecting to VPN servers transparent to users. You also mention Marvell as a RIM trade. I like this potential trade much better. If you really want to play on Apple instead of RIM, buy LQMT.PK for .84 a share. In an 8-K filed on August 9, 2010, it was disclosed that Apple (AAPL) secured specific intellectual property rights from Liquidmetal Technologies (seekingalpha.com/symbo...) in exchange for a licence fee. This gives Apple exclusive rights to commercialize the product in the field of consumer electronics, while Liquidmetal will retain the right to market it in all other fields. The product is Liquidmetal, and it could help make an extremely sleek and aesthetically pleasing IPhone or new smaller IPAD that is virtually non-distructable. Liquidmetall is currently being used in a variety of applications, including medical devices, tooling, Department of Defense (that is probably the reason Apple negotiated lifetime licensing rights instead of buying this small company..too much paperwork and restrictions from big brother) and in high-end watches and sporting goods. When Apple reports next quarter, we will find out just how much they paid for this license. Internet postings are saying that Apple paid off all of Liquidmetals Technologies debt. All I know is that the stock shot up from .12 in July to $1.70 when Apple announced the license agreement in August. Since then the stock has settled back between .55 to .89 a share yesterday. If you look at the long term stock chart on LiquidMetals Technologies, you see that it came out several years ago at around $20 a share and then it steadily came down. Now the chart is looking very positive since the Apple license agreement. Buyer/Seller beware, this is a penny stock.

  • Report this Comment On September 29, 2010, at 5:06 AM, plange01 wrote:

    a early look the new rimm tablet looks really good.the size seems a lot better suited for the purpose intended than the ipad which is just a laptop missing the keyboard.in that case its better to get a small laptop!.a this price rimm is far to cheap!

  • Report this Comment On September 29, 2010, at 11:34 AM, jrmart wrote:

    From my experience, the IPAD is a fabulous business tool, not just another toy.

    Tim Cook, Apple's chief operating officer, confirmed that by noting on a July conference call with analysts that 50% of Fortune 100 companies are already deploying or thinking about using the iPad for corporate use.

  • Report this Comment On September 29, 2010, at 5:58 PM, stoneyne wrote:

    What all you fools fail to understand is that with the growth of the Smartphone/***Pad market will be huge. The analyst's as well as all of you feel that there will be winners and losers in this macro market. While some will do better than others, the big three, RIMM, AAPL and GOOG will all do well. RIMM may lose some market share, but it's not going away anytime soon. They make way too a reliable product and they ARE entrenched in many businesses that will never move to the "mostly play" environment adored by AAPL. GOOG is the wildcard, but with their dependence on advertising driving them, business applications become secondary. RIMM's playbook is hitting a totally different market than the iPad. It's for the business individual that has about 2 hours of downtime in their day to use their playbook for a little fun. The iPad user, on the other hand is for the artistic individual who has about 2 hours of worktime in their day to catch up on email etc. The Android users are somewhere in the middle. Until you guys realize that these products will offer something unique for different users, you'll fail to realize that each of these companies will continue to reap huge profits over the next few years. If you're stupid enough to short positions in RIMM, or any of these stocks with the huge opportunity in mobile communication knocking at the door, you're positioning yourself to miss a good buying opportunity. Just understand that the entire business population (RIMM) isn't ready to go to 100% playtime (AAPL) just yet. At least not on M-F.

  • Report this Comment On September 30, 2010, at 7:56 PM, MadMicro wrote:

    The tablet business is projected to grow to a 40B dollar behemoth, if this happens the chipmakers will reap tons of revenue from all the manufacturers. And many of these chips are in smartphones as well. I'm long on MRVL, QCOM, ARMH, MIPS and several others... all of which are up in double digits this year.

    Go mobile!

    == MM

  • Report this Comment On June 11, 2012, at 10:09 PM, Granzort wrote:

    BlackBerry Playbook is really great device. It offers stability for professional users. Since I travel a lot I am really pleased for Superb VPN and their Blackberry VPN Services. It is working great on my Playbook and I am able to access Blackberry App World from anywhere regardless of my geographical location.

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